IN Tanzania, where a substantial portion of the population remains unbanked or underbanked, cryptocurrencies offer an alternative way to access financial services.

Mobile money has already gained widespread adoption, and digital assets could further expand access to financial tools, particularly in remote and underserved areas.

Tanzania is witnessing a significant surge in the awareness and adoption of digital assets, with youth and tech-savvy entrepreneurs leading the charge.

The growing interest is largely driven by the younger generation’s openness to new technologies and the desirefor alternative financial solutions.

This shift, particularly evident in urban areas like Dar es Salaam, is transforming how businesses and individuals manage investments, cross-border transactions, and financial inclusion.

However, as with any emerging sector, Tanzania’s digital asset market must navigate both opportunities and challenges.

In recent years, educational initiatives have sprung up across the country, providing Tanzanians with the knowledge they need to safely engage with digital assets.

At Yellow Card, we launched the Yellow Card Academy, offering free resources on crypto, blockchain, and financial literacy.

The academy has become a crucial tool in bridging the knowledge gap, empowering young entrepreneurs and everyday Tanzanians to explore digital currencies with confidence.

Universities, such as the University of Dar es Salaam, have also recognized the importance of digital asset education.

Blockchain courses are now being offered, providing students with a foundational understanding of digital currencies and preparing them for a future where these technologies will be increasingly relevant.

Student-led tech clubs and entrepreneurship societies are organizing hackathons, workshops, and guest lectures to further spread awareness.

Meanwhile, the government has taken initial steps toward educating the public about the risks and benefits of digital assets.

The Bank of Tanzania (BoT) has issued warnings about cryptocurrency volatility and fraud, while engaging in discussions about its potential to revolutionize the financial sector.

The recent introduction of a digital asset tax under the Finance Act of 2024 signals that Tanzania is starting to recognize the role digitalassets can play in the economy. Despite the progress in public

awareness and education, Tanzania’s digital asset landscape remains in regulatory limbo. There are no specific laws governing the use, trading, or mining of cryptocurrencies, leaving the market in a gray area.

The BoT’s cautious approach reflects both the promise and the risks associated with digital assets. While the government has amended the Anti-Money Laundering Act to include virtual asset service providers, the lack of clear regulatory frameworks creates uncertainty for both users and investors.

 Moreover, the introduction of a 3% withholding tax on the transfer or exchange of digital assets, as stipulated in the Finance Act of 2024, could stifle growth in this nascent industry.

Local investors may be deterred from using licensed platforms like Yellow Card, opting instead for unregulated alternatives to avoid the tax burden.

This shift could not only expose the public to greater financial risk but also erode the taxable revenue base for the country.

Despite regulatory challenges, digital assets offer enormous economic potential for Tanzania.

 These technologies provide Tanzanians with unprecedented access to global markets, allowing for more diversified investment portfolios.

Cryptocurrencies can also reduce the costs and delays associated with cross-border trade, benefiting small and medium-sized enterprises (SMEs) engaged in international commerce.

This is particularly relevant in a country where traditional banking systems can be slow and costly, especially for cross-border transactions.

Furthermore, as Tanzania’s e-commerce sector grows, digital assets could become an attractive payment option. Cryptocurrencies provide a fast, secure way to make payments, which couldencourage more online transactions and drive the expansion of the digital economy.

One of the most significant benefits digital assets bring is financial inclusion. In Tanzania, where a substantial portion of the population remains unbanked or underbanked, cryptocurrencies offer an alternative way to access financial services.

 Mobile money has already gained widespread adoption, and digital assets could further expand access to financial tools, particularly in remote and
underserved areas.

However, the success of this potential hinges on security and risk management. To protect users, clear regulations and guidelines must be implemented for digital asset exchanges.

This includes enforcing Know Your Customer (KYC) and Anti-Money Laundering (AML) policies, ensuring that transactions are secure and fraud is minimized.

Public awareness campaigns should also be prioritized, teaching users how to avoid common scams and verify the legitimacy of digital platforms.

 The future of digital assets in Tanzania holds great promise. With proper regulatory clarity and continued education, digital assets will likely become a more integrated part of the financial ecosystem.

Asregulatory frameworks evolve, cryptocurrencies could see wider acceptance for investment, trade, and remittances.

Blockchain-based solutions may also expand, fostering a dynamic fintech environment that could propel Tanzania onto the global stage.

In conclusion, while the digital assets landscape in Tanzania remains at an early stage, its growth trajectory is clear. With ongoing efforts in education, responsible regulation, and technological innovation, the country is well-positioned to harness the benefits of digital assets while mitigating associated risks.

The key will be balancing innovation with prudent risk management to create a stable and inclusive financial environment for all Tanzanians.

Susan Ponera is the Country Manager for Yellow Card Tanzania, a leading cryptocurrency exchange in Africa